Matt Greenfield is the managing director of Rethink Education, a venture fund focused exclusively on early- and growth-stage education technology startups. Tom Segal, an analyst for Rethink Education, has written extensively about innovation and educational technology issues.

The Heart of Darkness*: Launching a Venture in the Ed-Tech Market

There are some folks across the blogosphere that simply cannot buy the idea that a for-profit venture in the education space could possibly be out for anything other than scraping a buck or two from the American taxpayer (who cares about that pesky notion of a sustainable business model anyway?). These combative souls appear to take great pleasure in condemning for-profit ed-tech ventures as being the decay of our education system: filthy, greedy entrepreneurs spawned from some kind of Randian nocturnal emission** in order to conquer our last bastion of purity: K-12 students. Pure evil. Dark, dirty evil.

I personally have suffered devastating attacks from said folk, phrases like "some money-grubbing entrepreneur" that rendered me sleepless for at least a few minutes before I realized, "Hey, somebody thinks I'm an entrepreneur! Sweet!"

Unsurprisingly, I disagree with this general assessment of the venture world within education. While I do think many flaws exist within the sales and adoption processes (notably that there is often a serious gap between the purchaser and the end user, as well as a lagging professional development system that does not focus enough on adoption and on-boarding), I strongly believe that we are moving closer to the ideal, not further from it.

So here goes, a brief playbook to getting your ed-tech venture underway! We will start at the beginning***: formulating a plan of attack.

Step one: do your research. Let me reiterate: DO YOUR RESEARCH. Comb the market, learn the players, find the gaps/weaknesses/strengths and assess where you can fit in. I cannot tell you how many pitches I have received from founders looking for seed capital that genuinely believe their idea to be God's gift to this green earth and the solution that will cure the infection that is crippling our education system (hyperbole is a staple of the seed pitch) - only to discover that not only does this solution already exist, but many competitors have actually gained significant traction.

"We are going to bring PARENTS into the learning process! We will be the Facebook/Pinterest/Twitter/LinkedIn/Kayak/Pandora/SalesForce/yada/yada/yada of Education! We are going to take the textbook and bring it online! BIG DATA!!!"

Every time I hear these recycled references within the first thirty seconds of a pitch, my mind tends to shift toward thinking about who the Seattle Mariners have pitching later that evening.

This sort of pitch may catch the fancy of a more generalist VC or the ever desirable "high net worth angel," someone with dollars to spend and a vague notion of the newly-sexy ed-tech venture market... but the truth will inevitably be unearthed during the due diligence process. If it isn't, then your investor is either a) an idiot, b) doesn't do his homework, or c) sprays money all over the market hoping to hit a winner. As nice as it is to get some cash in the door to launch your venture, your early investors should also serve as an extension of your business development operation, not to mention a guiding hand in the boardroom (or whatever equivalent your young company may develop). Having a group of early investors that are idiots or don't do their homework is a clear sign you are headed for disaster, and having a group of early investors that simply spread their seed across the board is a clear sign that you will not hold their attention and thus derive little value from them outside of those dollar bills.

If you are a techie looking to apply a solution from, say, the corporate world to the education world (a common occurrence given the relatively slow pace of adoption in the K-12 classroom), go find yourself a teacher ASAP. Or two. Or twenty. Soak in as much knowledge of the daily routine of a teacher/admin/student as your contacts will allow before filing harassment charges (ok, maybe not that far). The education venture world is an entirely different beast for a host of reasons (political, bureaucratic, financial, lack of uniformity in end-user skills and knowledge base, and the fact that you are typically dealing with a room full of eight-year olds, not to mention the students). If you as an entrepreneur think you can simply step in and solve the pain points of the learning experience simply because you yourself went through the system as a student... well, you've got another thing coming to you.

If you are a teacher with a daily headache and the rough idea of how to alleviate the pain at scale (we call these characters "teacherpreneurs" in the Biz), find yourself a co-founder with technical skills and a desire to make a difference. This may sound like a difficult proposition, but I have encountered numerous ventures that were constructed in this very manner. CTOs are out there (though admittedly concentrated in San Francisco, New York, or possibly Austin, TX): veteran techies looking to put their skills to work at a startup early enough to yield significant equity, or young programmers seeking to disrupt the world for the sake of disruption, do-gooders that look upon risk like an elephant looks upon a dung beetle (that is, with little concern). While some find success recruiting a cofounder through social media and various 21st Century platforms, many couplings simply happen through conferences and meetups. In particular, meetup.com does a terrific job of organizing tech meetups across the country on a daily and nightly basis. You may not find the perfect match after one event, but I promise you there are oodles of coders out there constantly attending these events if for nothing else than to stay up-to-date on the latest happenings and projects being considered.

If you can't find a technical co-founder, do not fret. There is no harm in outsourcing the work of producing a minimum viable product, as long as you establish a clear line of communication and do your best to learn the lingo of the programmer. You may also (gasp!) try learning a bit of code yourself, at least enough to get the ball rolling. While an intimidating proposition, there are myriad examples of entrepreneurs with no previous coding experience simply teaching themselves what they need to know. This will likely require more than a few sessions on Codecademy or something of the like, but if you feel strongly enough about your problem and/or solution, this is the sort of dedication you as a future CEO will ultimately need in order to gain traction anyway. Look at it as a beta-run of your entrepreneurialism, and pivot accordingly.

If you are both a teacher AND a programmer, and you have encountered a concrete problem to solve COUPLED WITH a relatively untapped market... feel free to shoot me an email. I've got checks to write and wisdom to dispense.

This concludes Part One of our series, The Heart of Darkness: Launching a Venture in the Ed-Tech Market. Part Two to come: Moving from Seed to Early/Growth - how to go about approaching the venture capital route.

*Sarcasm... just in case that wasn't clear.
**After a bit of Googling, this is the phrase I selected in place of a cruder, likely better fitting term.
***In my experience, the beginning is generally a good starting place.

Categories:

Tags:

Ground Rules for Posting
We encourage lively debate, but please be respectful of others. Profanity and personal attacks are prohibited. By commenting, you are agreeing to abide by our user agreement.
All comments are public.